Ever since the country’s trade pact with China was signed on June 29, local banks eager to venture into the Chinese market have set their sights on five areas densely populated by Taiwanese businessmen, officials from Hua Nan Financial Holdings (華南金控) said yesterday.
The Yangtze River Delta in Jiangsu Province and Zhejiang Province and the Pearl River Delta in Guangdong Province where the largest numbers of Taiwanese businessmen in China are located, are the top priority of local banks, the officials said.
However, if they go there all together, the competition among them is expected to be fierce, they said.
The other three areas are Chengdu and Chongqing in western China, Bohai Bay in northern China’s Hebei Province and the Western Taiwan Strait Economic Zone in Fujian Province.
Chengdu and Chongqing, along with Bohai Bay, are attractive to local banks because China’s authorities offer fast-track services in approving Taiwanese banks operating there and waive restrictions on the number of branch offices they can open in attempts to boost local economic development.
Among the local banks, Hua Nan Bank (華南銀行), First Bank (第一銀行), Taiwan Cooperative Bank (合作金銀行), Chang Hwa Bank (彰化銀行), Cathay United Bank (國泰世華銀行), and Land Bank of Taiwan (土地銀行) have received approval from Taiwan’s Financial Supervisory Commission to upgrade their representative offices in China to branches.
The top priority for those banks is to make profits after the inauguration of their branches in China, as local rules stipulate that they can only extend loans in Chinese yuan to Taiwanese businessmen one year after they begin to make profits.
Hua Nan Bank estimates that its Chinese branches will break even within six months to one year after opening and it forecast that it will be able to lend US$56 million in the first year, similar to a First Bank forecast of US$50 million to US$100 million.
However, since Taiwanese banks will not be allowed to receive savings in yuan, their ability to extend loans in yuan will be limited unless they cooperate with Chinese banks.
Local bankers said Taiwanese banks used to be more cautious than their Chinese counterparts in extending loans and are more familiar with Taiwanese business operating in China, while Chinese banks have ample supplies of yuan, so that cooperation between them are likely to benefit both sides.
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